Crude futures gain 4.19%, WTI trades above $26 a barrel

Crude oil futures gained Rs 1,991 per barrel on May 14 as participants increased their long position as seen by the open interest.

Oil price rose after the International Energy Agency (IEA) predicted lower stockpiles on strong revival in demand in European countries, the United States and China.

The US Energy Information Administration (EIA) reported that the US crude inventories fell by 745,000 barrels for the week ended May 8.

The US Energy Department said on May 13 it will buy up to 1 million barrels of sweet crude for the government's emergency petroleum reserve to support struggling producers as the coronavirus strangles oil demand, Reuters reported.

Crude oil prices trimmed previous losses and rallied above $25 on a surprise draw down in weekly inventories.

The EIA report showed that US crude oil inventories fell by 0.74 mb against expectations of a rise of 4.1 mb. The worries over a second wave of coronavirus infections and warning of deeper recession from the US Fed Chairman may keep upside limited in oil prices with fall in equity indices, said Tapan Patel, Senior Analyst (Commodities), HDFC Securities.

In the futures market, crude for May delivery touched an intraday high of Rs 1,994 and an intraday low of Rs 1,919 per barrel on MCX. So far in the current series, crude has touched a low of Rs 796 and a high of Rs 3,905.

Crude oil delivery for May rose Rs 80, or 4.19 percent, to Rs 1,991 per barrel at 1502 hours, with a business turnover of 4,499 lots.

Crude oil delivery for June gained Rs 75, or 3.80 percent, to Rs 2,049 per barrel with a business volume of 1,926 lots.

The value of May and June contracts traded so far is Rs 836.88 crore and Rs 24.83 crore, respectively.

Patel expects oil prices to witness resistance near $27 and support at $22. At MCX, crude futures for May has support at Rs 1,890 with resistance at Rs 2,010.

West Texas Intermediate crude gained 4.03 percent at $26.31 per barrel, while Brent crude, the London-based international benchmark was up 3.32 percent to $30.16 per barrel.